Import-export group says Conservatives don't understand impact of tariff changes

OTTAWA – The head of the Canadian Association of Importers and Exporters has launched a blistering attack on the Conservative government for what she’s calling its “quest for cash” that is hurting business and will cost consumers.

Joy Nott, the president of I.E. Canada, is wading into an ongoing dispute between a coalition of television importers and the Canadian Border Service Agency over what critics are calling the Harper government’s “iPod tax.”

TV importers have evidence the government has given them bad advice on tariff exemptions that Ottawa intended to later claw back, including tariffs on TVs, computer speakers and MP3 players, such as iPods.

But Nott says the problem runs deeper, and that major tariff changes announced in Finance Minister Jim Flaherty’s March budget will have a ripple effect on Canada’s import-export community — and consumers.

The budget prominently stated that import duties on some popular sporting goods would be dropped. But buried in the back pages it also noted that Canada would be “graduating” goods from 72 countries to a higher tariff classification, starting in 2015. The measure will bring in $333 million annually, said the government.

“Quite frankly, the single line about the (General Preferential Tariff) changes actually has a much wider and much more negative impact on the ultimate consumer than duty give-aways on cricket bats and hockey sticks and whatever,” Nott said in an interview.

She called the sporting goods tariff cuts “almost like a smokescreen.”

“I think at this point it hasn’t really hit home to the average consumer that this all means for them increased prices.”

But consumers are not I.E. Canada’s membership. Businesses are.

An internal poll by I.E. Canada found that almost 60 per cent of its members were unaware of the budget’s tariff changes.

That’s particularly troubling when layered on to the Canadian Border Services Agency decision to revisit its own advance tariff rulings and charge TV importers $16 million in past duties the importers have no way of recovering, Nott argued.

“You can’t do that,” she said. “Businesses need a level and concrete ground to stand on, so that when they make decisions they’re comfortable that they understand the level of risk they’re taking.”

A spokesman for the finance minister said the tariff changes were “long overdue” because the current system punishes Canadian companies by “giving special breaks to emerging powerhouses” such as China, South Korea, India and Brazil based on a decades-old export development program.

“Naturally, some big importers of Chinese goods (and their lobbyists) have a self-interest in protecting special breaks for Chinese goods entering Canada,” Dan Miles said in an email.

The 9948 Fair Treatment Coalition, representing TV importers, issued a statement this week that the CBSA’s demands for retroactive tariffs after providing business with formal advance rulings was undermining the whole system.

“If this unfair ‘look-back’ liability on our previously approved duty-free imports is not reversed, then the entire duty system becomes suspect and future advance rulings questionable,” Daniel Song of Colby Electronics said in the release.

Canada has had a stable and virtually unchanged tariff regime for almost 40 years and the government is making significant changes all at once, Nott said.

She said Flaherty and the Conservative cabinet ministers responsible for the border agency, Vic Toews, and international trade, Ed Fast, don’t appear to be talking to each other and someone needs to co-ordinate government policies that are impacting small and medium-sized businesses.

The three ministers are all acting within their powers when they make changes, said Nott.

“But unless they touch base with these other two ministers and look at what the change is going to mean from both an import and an export perspective, they really don’t understand the impact they’re having on business,” said Nott.

“That’s a problem.”

The Canadian Manufacturers and Exporters association, however, supports the changes.